5 Tax Issues You'll Face in Retirement
As long as you live, the government will likely find some way to tax you. However, retirement will drastically change both the taxes you pay and how you pay them. It's important to understand your likely post-retirement tax situation well before you actually retire, so that you will be ready and able to pay those taxes as needed.
Once you retire, you finally get to start spending the money you've worked so hard to save during your career years. Tax-deferred retirement accounts give you a nice benefit at the time you save the money by allowing you to deduct those contributions from your income.
However, once you switch gears and start taking money out instead of putting money in, the government will demand its due. Any money you take out of tax-deferred retirement accounts (including traditional 401(k)s and IRAs) will be reported and taxed as income on your annual tax returns.
Source: Fool.com
